Wednesday, May 30, 2012

For all the deserved fanfare over the first free elections held in Egyptian history, it has provided a cruel slap in the face for anybody who risked it all to make this election possible. Egypt now face a choice between candidates who represent the Muslim brotherhood and Mubarak era, which would force a chuckle if the consequences of this runoff were not destined to be tragic.

However this is no shock as the Egypt revolution was more of an event than a organised political movement prepared to cease power through democratic means.This is because there was no real agenda other than getting rid of the Mubarak regime and not what came next. There was no party, program or organisation to mobilize the critical mass of Egypt hungry for change except for organisations that were indifferent to the revolution or against it outright.

The Muslim brotherhood and pro-Mubarak groups, which mostly emanate from the military, were and are the only groups who could gain mass support and were ready to take power. This election reveals how deep the revolution penetrated within Egypt as it now looks like the revolution was only favored in city centers.

This now presents a nightmare for other nations looking to deal with Egypt, especially the United States as a Muslim brotherhood win would mean the relationship between Egypt and the US looks set to be hostile to say the least and a win for the pro-Mubarak candidate would provide a tricky problem of reconciliation which will make the United States look hypocritical.

Protests may return to Egypt's city streets over the result of this election as they fear the revolution may be over before it started. However the proponents of the revolution seemed to underestimate the propensity of democratic elections to produce politically inconvenient results. There is no better example than when the US actively encouraged democratic elections in Palestine and ended with the irony of an democratically elected Hamas.This happens because pro democratic groups pay no attention to existing political dynamics and the compromises to succeed.

There are many interests and relationships in Egyptian politics to which proponents of the revolution appealed to none. Liberal tendencies heavily underestimated the law and order vote made relevant by the confusion and conflict of the revolution itself. They instead sought to appeal for needed economic reform and growth which other candidates had also stated their plans for growth and development.

because of these flaws, Egyptians now face cruel choice its long endured past and it worse nightmare as there is certainly going to be future conflict regardless who ends up in office whether over cultural and religious issues or issues to do with personal freedom as a pro-Mubarak regime will likely tighten its grip.

While there are expected pressures when playing host to a major football tournament, Ukraine couldn't have expected the amount of pressure put on them.Ukraine has been especially targeted for serious pressure as their racist hooliganism problem has been bought into the light thanks to a classic expose from the flagship BBC programme panorama where former England defender Sol Campbell warned fans to stay away as the chance of being attacked were likely.

However their problems were mounting some time before the programme when the families of two black England players stated their intention not to attend the championship matches in Ukraine for fear of attack and the UK foreign office put out a press statement basically insisting British citizens of Black and Asian descent to watch their back, front and sides.

Questions over whether they actually host the event have worsened with extra spotlight lent to the political dynamic in the country the current leader of Ukraine is publicly trying to bury his predecessor which has led to calls for a boycott of the tournament, which can explain the relatively large surplus of tickets that have not been purchased.

This is made worse as fellow hosting nation Poland have a much more stable political dynamic and are members of the EU despite football hooliganism being arguably worse in Poland than it is in Ukraine. While Ukraine's problems pitch side are being held to scrutiny, the pluses of hosting an event of this size in Ukraine are being overlooked. Ukraine has failed in selling its fantastic culture, cities and its strong footballing tradition with their clubs regularly competing with the best Europe has to offer, which is more than could be said for World Cup 2022 hosts Qatar.

In sum, Ukraine's problems with regards to racist and violent football hooliganism is no secret and a number of nations attending the event have a similar problem, some even on a greater scale. The concern over Ukraine political dynamic is worth noting but it should not overshadow the pluses of hosting this great football event in a football mad nation.

People can argue eternal how to create opportunities for growth but nothing compares to the power of a badly thought out law to start new growth industries.

Badly thought out laws have single-handedly started growth industries with no better example than the US prohibition of alcohol in the 1920's and early 1930's which made millionaires out of criminal figures such as Al Capone and anybody prepared to exploit a product everybody wanted but were told they cant have. Another badly thought out law has started another growth industry in writing off Irish debt.

This is due to Ireland's punishing regime regarding bankruptcy which has led to UK and Irish law firms exploiting the UK's comparatively lax bankruptcy laws, writing off debts running into the billions. This is good for debtors who would face years of hardship under the Ireland regime but disastrous for creditor and the Irish taxpayer as they stand to lose out.

Creditors are duking it out in the courts as they seek to stop this growth industry which to see banks make major losses in unhealthy climate for banking institutions and banking in general. The 21st century already looks to be a miserable century for banks as the markets, and more importantly, depositors have very little confidence in them as their hard earned money has lost value, are punished for saving due to low interest rates and the notably hostile nature banks have towards borrowers.

However, this booming industry seems restricted to Ireland debtors and is likely to put under considerable pressure when the Irish government draw up bankruptcy law reforms guided by common sense and not moral fortitude.

In conclusion, badly thought out laws have started many growth industries in the mainstream and underground economy and many shady character have flourished but these laws have a tendency to be corrected when the consequences become hard to ignore but by then it is too late. In an era where banks are looked upon unfavorably, a growth designed at bailing out borrowers through the courts does not help, but in light of the government's extensive bailout of banks, it about time debtors found theirs.

Saturday, May 26, 2012

There are many words you can use to describe a politician, words like corrupt, hypocritical and dishonest would come to mind for many but what one word you cant use to describe politicians and politics is unpredictable.

Many liberals as well as conservatives suspected that President Obama was in favor of the advancement of gay rights with his repealing of don't ask, don't tell and stated disapproval of the defense of marriage act. Obama should receive some praise for taking the position but the timing of his decision was convenient to say the least.

The latest polling on the issue of same sex marriage indicated major gains in approval suggesting a relatively even split between people who are in favor or disapprove just a few days before his announcement live on ABC. Two states came out against same sex marriage which put the issue of same sex marriage on the national stage which would have made sure Obama's announcement of his position would be become an nationwide debate.But for all the planning of the Obama Whitehouse, the announcement of his position has not had the effect Obama may had hoped for.

According to polling carried out by the pew research center, 52% of respondents reported that Obama's announcement had not affect their opinion of him, 25% saw him in a less favorable light and 19% more favorably which meant that when the president said he was for gay marriage 52% of Americans said 'so?' and 25% said 'eeeuww'.

This is no shock in a political climate where the issue of the economy trumps all others as there's a long history of the rights of others (especially minorities) playing second fiddle in America and gay rights is just the most recent. With the Obama Whitehouse in full knowledge of this it is hard to fathom what they sought to gain with Obama's approval rating faltering and Mitt Romney making gains in the polls, stating his position on a issue that divides opinion across social, cultural, and religious lines, is clearly not the wisest decision to make.

The statement of his position look to be a totally political measure to get republicans talking on a issue that they greet with an open dislike as they now suffer over issues to do with sex, an issue republicans politicized in the first place . This explains the furore over Rush Limbaugh comments over the issue of contraception and presidential candidate Rick Santorum reiteration of his stance towards issues to do with sex as republican positions haven't really changed since the sixties despite society's attitude to sex relaxing over time.

This is why democrats have the women's vote and Obama has a large margin over Romney in women voters as republicans take positions that can be perceived to be anti women. However Obama's statement of his position on same sex marriage is only a short term measure as this election this going to be about the economy as the two wars that have dominated American politics are winding down and more people are starting to pay more attention to their pocketbook.

In sum, while Obama statement of his position on gay marriage is timely and should be merited, but it should be seen for what it is, a short term political measure. In the upcoming election his answers to fixing the economy will matter more than is position on same sex marriage as minority issues tend not to breach the national debate during elections and tend not last long to in national debate if they do.to finish, politics is not about issues, it is about climates and Obama may not have been right in stating his support for gay marriage but it will do little for his reelection bid.

Type 'Greek Crisis' in your browser of choice and you will find many explanations that detail the causes and consequences of Greece's financial turmoil but few will deal with ideas that have instructed the integration of Europe from the end of the second world war to the present day.

Greece has been a (and surely not the last) victim of a dream , a dream deeply held in some quarters in Europe and reviled in others, namely the establishment of a united Europe. Borne out of the horrors of the second world war, the drive to a united Europe has been the heart of the EU project with further integration and growth in numbers among its member states on a level unseen in the history of international politics.

The euro was seen as crowning moment for proponents of a united Europe as seventeen EU member states sought to ditch their long established currencies for the euro overseen by the ECB or the European Central bank. However, for all the gains made by those in favor of a united Europe, the project could not escape it's biggest flaw, the utter divergence in economic, and especially, political interests.

This flaw was masked by the initial success of the euro competing competently with the dollar and the pound so much so it became a national debate in the UK of whether the pound should be ditched for the euro, a country renowned for its Euroscepticism .Poorer states in Southern Europe saw an influx in investment and cheap money which saw a boom in the EU area until the party ended abruptly.

The poorer nations in the euro-zone were hit hard by the financial crisis such as Portugal, Ireland, Italy, and Spain, but especially Greece. Greece suffered from an economic nightmare made up of large debt, a high cost of debt, high unemployment numbers, credit downgrades (which contribute to the cost of debt), but all this worsened when markets started questioning not only Greece's likelihood of and commitment to staying in the euro-zone but of other euro-zone members commitment, especially Germany (a nation committed to the united Europe project) to keep them in it.

The markets doubts were confirmed as Germany initially refused to bailout Greece despite Germany involvement in the euro being the reason why investors poured money into Greek bonds. Germany's early position of no bailout was based on the lesson provided by the failure the exchange rate mechanism, the first dalliance among proponents of the united Europe ideal of a single currency, which made Germany consider the cost of tying its fate with other EU member states despite its long stated support of a united Europe.

Finding that it could not find a market solution to their financial problems, Greece sought help from the EU and the IMF who put together a rescue plan that many analysts thought would do some good but nowhere near enough.the most compelling insight of Greece's plight is that it could have been avoided or at least would not be as bad as it is.

Some of Greece's and other Southern European euro-zone members problems could have been avoided if the clearly stated rules for entry into the European Monetary Union (EMU) were followed as these nations regularly shirked the rules required to join and with there being no real process for dismissal for breaching EMU rules, no one could stop them.

This fact alone explains why France and Germany were pushing for a fiscal pact which made EU members in and out of the euro-zone follow strict rules regarding monetary policy.But this again reveals another major flaw with the EMU, its major democratic deficit. The fiscal pact limits the policy choices of elected officials and turns into glorified errand handlers for EU fiscal policy.

The political class in Greece would have a larger set of policy options if Greece was not in the euro-zone and may have helped cool the heated political climate as the political class would be more independent and the debate over what to do next is not a horrible choice between paying the price to stay in the euro-zone or face financial oblivion. The political dynamic over the last three to four years in Greece has been tumultuous to say the least with riots, largely over EU advised austerity measures, and numerous changes in political leadership culminating into a nationwide ambivalence towards the unified Europe project altogether.

In conclusion, Greece's political leadership cannot avoid blame for the financial problems it finds itself in and choices it will have to make but Greece has fallen victim to the interests of a political ideals that at once lacked political will and fiscal commitment and has a nation state at a crossroads where both choices require major changes in policy, and, more importantly, in politics.

Wednesday, May 16, 2012

You can say a lot about politics, that its corrupted, easy to corrupt, or just outright pointless, but what cannot be ignored is the inherently social nature of it. It is easy to say that politics is power but that power stands on very tenuous social ground where a politician is flavor of the month in one instance, then dickhead of the year the next.

The recent and ongoing phone hacking scandal has provided insight on a number of things but what seems to standout is the proximity between members of the political class and powerful media figures.We all know a politician's job is to make friends and influence people(especially the powerful) and that's involves schmoozing with other public figures but politicians suffer badly when the bottom falls out as there is no bottom in the first place.

Britain has a long held tradition of the satirical mocking of the political class, especially its relationship with the business community and the media as politicians become ironic parodies of the actual contradictions of their job as many a prime minster has found out. The problem in Britain with regards to members of the political class and social intersection with other powerful figures is that the public know that the majority of politicians are no good but don't like their opinion confirmed so graphically.

The solution of proximity between the political class and other figures is not build a firewall between them but involved parties to be more open, as discoveries that major legislation that affected you was discussed over a dinner party in Kettering or a pie and drink at Chequers does grate to say the least.

While there are concerns about labour leadership and the viability of labour leader Ed Miliband, Labour look primed to take office in light of a highly unpopular conservative and liberal democratic coalition. if its not the drastic cuts, an uber sluggish economy, the constant climb downs on policy, political scandals then it must be the utter dislike of a coalition government that has lost the trust of the British public.

Labour have not been the most effective opposition party but have been good enough with the conservatives feeling the pinch from the phone hacking revelations and the public sentimment growing against the coalition. Labour have a healthy lead over the conservatives in most polls by 8-10 points, even Ed Milliband is starting to creep ahead of David Cameron in favourability.

Another trend that is starting to gain traction is labour point growth with regards to issues traditionally dominated by the conservatives. Despite a serious wane in the last two years before the 2010 general election, voters have always trusted Labour with regards to pensions and the NHS, however labour have made gains with regards to law and order, gains that look set to increase with the conservatives pereceived to be out of touch especially during the relativley long period it took for the government to respond to the 2011 london riots.

Another reason that Labour may sweep into office is the next election may mark a minor shift to the left as John Cruddas, a well established and well liked figure of the labour left, has been tasked with the responsibility of drafting labour policy. New Labour embraced the 'business is good' mantra and represented close links with tthe business community as they tried to get rid of the perception that labour weren't pro-business. This involved tough stances against unions (reminiscent of thatcher at times) and the dropping of clause four.

Despite Ed Milliband stated ambivilence towards being painted as a man of the labour left, not helped much by his father being a prominet marxist and beating his heavily tipped brother in the race for party leadership with the help of unions, this can definitley help as may appeal to a large sect of voters who at once dislike conservative polices and values.

In sum, Labour have a chance to sweep into office as the Coalation government suffers from a credibility

(conservatives) and trust (liberal democrats) deficit that looks unllikely to be bridged anytime before the next general election and mark a clear transition of the era of New Labour.

Tuesday, May 15, 2012

There are plenty of products out there that are a risky sell, that may be volatile and thus difficult to shift but there is one product that stands alone in risk and volatility: the Credit Default Swap(CDS). Credit default swaps are basically an insurance policy against default of a number of products but are mostly used for loans and bonds.

While on the surface there is nothing wrong with this sort of transaction, it suffers from one fatal flaw: the buyers of credit default swaps benefits heavily if the loans and bonds bought goes sour. This was the main cause of the financial crisis of 2007-2009 as savvy investors bought credit default swaps on loans with horrible interest rates given to people who had no means at disposal to pay for the loan, meaning defaults would happen on large scale and investors cashed in.

This was made worse as rating agencies gave triple A status to loans that were either of poor quality (little or no financial provisions on borrowers + nosebleed interest rates after 'teaser' or introductory offers have expired) or grouped together as CDO's or Collateralized Debt Obligations.

Companies such as Goldamn Sachs cashed in as they bought CDS against their own products.It seems obvious that it might be a bad idea to insure something when it's chances for default or destruction can be predicted or the quality, or lack of which, can be concealed but this wasn't apparent to the fine people at AIG, who ended up holding one of the largest bags in financial history.

CDS are an evolution in investing as a investor can hedge his bets without having to go through the complicated process of shorting their positions. In effect, credit default swaps are a straight gamble as the investor wagers on the fate of a given loan or bond with the insurer acting as a bookmaker, but the odds seems heavily in favour of the buyer savvy enough to realise the true volatility of product insured.Some may see this as a dishonest way to make a living, however, if the loans and bonds offered to borrowers and investors were of greater quality, there would not be a 30 trillion market in credit default swaps

In sum, credit default swaps maybe the quickest way to bankruptcy for big insurers but they are the best thing to happen to the investor as he can make a straight bet if he thinks a product is of poor quality and in the long run may force creditors and rating agencies to up their standards to avoid the financial debacle of 2007-2009.